The Causes and Repercussions of the Nuclear Agreement between Iran and the P5+1

Following a twelve-year crisis over Iran’s nuclear activities and 20 months of intensive negotiations, Iran and the P5+1 (permanent members of the Security Council plus Germany) reached an agreement on 14 July 2015 curbing Iran’s ability to use uranium or plutonium in weapons in exchange for relief from sanctions. Many questions have been raised since then, of which the most important is why Iran accepted a deal that will curb its nuclear ambitions and put it under strict international scrutiny.

Even accepting Iran’s insistence on the peacefulness of its nuclear programme, the questions remain why it was now ready to accept a deal and whether Iran really refused a negotiated settlement in the beginning. According to information leaked in 2008 in the United States, Iran in 2003 proposed a package including a compromise over its nuclear activities and its regional role. “[But] nobody took that [deal]—nothing has happened,” said the US secretary of state John Kerry, in an interview with ABC TV in November 2013. Iran was thus ready for a compromised settlement over its nuclear programme, but the US refusal even to look at it at the time led to a more orthodox approach on Tehran’s side, which was reinforced by the election of President Ahmadinejad in 2005.

During Ahmadinejad’s tenure, his negotiating team clung to the idea that resisting the pressure of the Western powers would lead them to take a more pragmatic approach towards Iran. That approach got the nuclear issue into the UN Security Council and led to the imposition of sanctions under Chapter VII of the UN Charter. The nuclear issue and the way Ahmadinejad’s administration handled it provoked a fierce debate during the presidential-election campaign of 2013. Rouhani, among other candidates, criticized Jalili, the head of Iran’s negotiating team who was also a presidential candidate, asserting that he would change the way Iran dealt with the international community once elected.

Promising during his campaign to create more jobs and lower the poverty rate, Rouhani was well aware of the damaging effect of the UN, US, and EU sanctions on Iran’s rentier economy. After his inauguration, Rouhani and his administration therefore made it clear that the ruling elite was focusing on the nuclear programme as the key to sanctions relief and ending economic stagnation. The nuclear file was passed from the Supreme Council of National Security to the Ministry of Foreign Affairs, acting under the supervision of President Rouhani. Despite his rhetoric about placing Iran’s neighbours at the top of his foreign-policy agenda, the new foreign minister, Zarif, spent much of his time in negotiations with his P5+1 counterparts.

Three main causes led the ruling elite in Iran to get serious with the P5+1 and bring about a deal:

Economic hardship

Sanctions worsened the already disastrous economic situation that was the legacy of Ahmadinejad’s presidency. Fear of a resulting threat to the Iranian Islamic system brought about the selection, and election, of Rouhani, who favoured a compromise on the nuclear programme as a way to get sanctions lifted and improve the economic situation, and he was himself a trusted member of the system.

Popular demand

The demand for a resolution of the nuclear issue and other differences with the international community was obvious in the presidential election and in the celebrations that welcomed every step towards a final deal that swept Tehran and other major cities. This popular demand made it easier for Rouhani to overcome his rivals’ criticisms.

Openness to the world

In addition to the youth who demand openness to the world, there are reformist politicians who see such openness as a precondition for democracy and the reform of the political system. Even though Rouhani cannot be considered a reformer, he is backed by reformers and his main rivals are the anti-reformist conservative politicians. He is therefore on the side of the reformists in that respect.

Now that Iran has come to an agreement with the international community over its nuclear programme, internal rivalry between the two main factions, the reformers and the conservatives, is expected to grow. A critical overview of the nuclear deal has began already, and some conservative figures have gone so far as to accuse Rouhani and the negotiating team of treason. Political rivalry is thus expected to exert great pressure on the administration, mainly through the parliament and conservative figures in the next two years. Rouhani, in contrast, is trying to bridge any gap that might weaken his relationship with the supreme leader. He is betting on keeping Ayatollah Ali Khamenei on his side for protection against his political rivals.

In addition to political rivalry, there are mounting economic pressures on the administration. The rhetoric of Rouhani and Zarif is focused mainly on gains Iran will make as a result of sanctions relief following the agreement. That rhetoric is well received by the richer parts of society—the poor are mostly sceptical that any gains will reach them—and the youth, at least in the short term. Rouhani has a much more difficult task in bringing the biggest stakeholders in the Iranian economy—the Revolutionary Guard and various bonyads, huge charitable foundations—on board with his economic-reform agenda. It is expected that those stakeholders will use their power to stop the administration from changing the economic structure so rapidly, as they are expected to be the losers in such changes. This is expected to be a great challenge to the economic and political agenda of Rouhani’s administration and that Rouhani will try at first to appease those big stakeholders by offering them tax cuts, sweetheart contracts, and other economic means, in the hope that, as a result of sanctions relief, his administration will, in the longer term, be strengthened against those opposing his changes.